‘ATMs have improved cashless policy’

The Head, e-Business, Stanbic IBTC bank, Thabo Makoko, spoke with Bukola Afolabi on the challenges of implementation of the automated teller machine (ATM) cards and cashless policy in Nigeria

We have heard and also read about the phenomenal growth of payment cards since the Central Bank of Nigeria started implementing the cash-lite policy. What is the current state of debit and credit cards issued by Stanbic IBTC and the wider financial services sector?

It is true that the CBN cash-lite policy implementation has increased the demand for cash-lite instruments and cards have been in high demand in the industry. This year alone, our credit card business has grown by over 400 percent while the debit card business has almost doubled.

Customers are realising the benefits of using cards for their transactions – flexibility, convenience, security of using cards compared to cash, among others. As parts of our drive to provide end-to-end financial services solutions for our customers, we issue debit cards to every account holder from inception. This empowers them to carry out transactions with very little dependence on cash.

Self-service channels including ATMs and Point of Sales (PoS) terminals remain highly convenient as they are available 24 hours a day and seven days a week.

In addition to CBN’s cash-lite policy, how pivotal is the role of technology, such as increased internet connectivity and robust payment platforms, in driving the adoption of cards in Nigeria?

Technology is essential in driving a cash-lite industry. Our major concern as a bank remains the technology driving the business, particularly the communications for PoS terminals and electronic banking platforms. We invest in educating customers to migrate from cash reliance to using their cards on PoS terminals.

However, if the terminals do not have a 99 per cent uptime, it discourages the behaviour we work so hard to achieve. There are some key partners involved in processing card transactions: telecommunication companies, Nigeria Inter-Bank Settlement System (NIBSS) and the banks. All partners need to be available to ensure better service to customers.

Over the past 18 months, there have been improved commitment and focus in ensuring that we improve the industry and offer a compelling alternative to the traditional cash.

With the growth trend you have enumerated, would you say that Nigerians may be discarding their fear of using cards for financial transactions?

To a large extent, I will say yes. Every day, more people get more comfortable with the use of cards. However, we still have to work towards the stage where every bank account holder, in addition to having a card, does most, if not all, of their current cash transactions via credit or debit cards. CBN introduced new pricing tariffs and these were meant to encourage the use of non-cash instruments so that consumers can only enjoy the benefits of adopting cash-lite instruments.

Another reported drawback with using cards issued in Nigeria is security. How secure are credit cards issued by Nigerian banks?

All banks are governed by the Central Bank of Nigeria to ensure that standard national card security features are enforced. One of these features is the ‘chip and PIN’ technology which prevents the cloning of cards.

Card association requirements for MasterCard and Visa also include the Payment Cards Industry Data Security Standards (PCIDSS) certification for card issuers. PCIDSS is the international payment card industry data security standard which is a compulsory international standard on card data security.

With this certification, Stanbic IBTC Bank’s card payment solutions and debit and credit card services have met the highest standard of security of customers’ information and transactions on its e-banking platform, which significantly reduces the risk of card system compromise.

We also have a fraud monitoring tool on our credit cards called the Visa Risk Manager which effectively monitors and prevents fraud on the credit cards. We always encourage card holders to take security measures concerning their cards like not accepting help from strangers when using their cards; inspecting transaction terminals like PoS machines and ATMs for suspicious devices used to fraudulently collect card details from unsuspecting cardholders; or people trying to note their PIN at an ATM, and so on. Our Customer Care Centre is available 24 hours every day to assist customers with their cards needs.

Recently, it was reported that there are over 150,000 PoS terminals currently in Lagos with many of the terminals inactive. Don’t you think this can dampen enthusiasm of Nigerians towards cards?

Yes. There are people who are eager to use their cards at PoS terminals because PoS machines offer more security than carrying cash around. However, people are not so confident that every time they walk into a merchant’s location, their card will be accepted.

From the merchant’s perspective, there are several reasons they do not have active terminals. These range from shop owners’ reluctance to bear the associated costs; shop attendants not willing to use the terminal for reasons including getting tips as a result of cash transactions, indifference to the value and convenience that the terminals offer, and so on.

These are, however, teething problems associated with the adoption of new solutions. Industry trends indicate that more and more customers will switch to PoS transactions and cards will be a better transaction option when compared with cash.

Nigerians started embracing credit cards recently. Why did it take so long for banks in Nigeria to issue their customers credit cards, considering how long debit cards have been in the market?

Credit cards, being an unsecured loan product, must be treated as any other loan product – it requires verification checks, documentation, proof of repayment; and so on. In Nigeria, issuing of credit cards is done with much caution as they are prone to default if not carefully managed.

Other developed countries have easier tracking systems where credit rating determines several other socio-economic factors in individual lives; therefore citizens exercise discipline and ensure their cards are properly serviced.

In Nigeria, however, we are gradually building our centralised credit bureau system for referencing customers who have good credit history to extend the credit card product to a larger group.

I believe that in time, credit cards will be very popular in the country when the credit system is fully developed. For now, Stanbic IBTC Bank remains one of the few banks offering the product to a certain category of customers.

People in the lower demographics have been reported to be more faithful in repaying bank loans, compared to people in the upper class. Why are these people who have shown high fidelity in loan repayment not the major focus of the banking system when it comes to products such as credit cards?

Our credit card holders include persons who earn from N80,000 per month. This indicates that we do not necessarily offer the product to only the upper class. For us, the ability to demonstrate regular repayment via earning a stable income over a few months is a major condition.

With about 30 million bank accounts operated by Nigerians, as reported by the CBN, are we looking at such a number as potential credit cardholders? What does the future hold for credit card usage in Nigeria?

The future is bright for the credit card business. We just need to keep setting up the proper structure in place to improve the card system. We need to have a proper credit rating system which will guide the banks in making the right customer selection for the product.